Coronavirus-Related Distribution Rules

[Retireatee1]

I'm having a bit of trouble finding the exact rules around taking a Coronavirus-Related Distribution (CRD) from an IRA.  I would be interested in this as a tool to move pretax funds from an IRA into a regular brokerage account for early retirement planning purposes.  I realize there are other solutions such as SEPP but I want to fully explore this.

In my case, I was given a 20% pay cut due to CV-19.  I am salaried so my hours weren't cut.  There were no furlough days.  Just a pay cut, supposedly temporary.

Would I qualify to take a CRD of up to $100,000 without the 15% penalty?  Any pay the tax over 3 years?

[MDM]

Depends on how literally the law is interpreted.  What it says is you are eligible if you are someone

(I) who is diagnosed with the virus SARS–CoV–2 or with coronavirus disease 2019 (COVID–19) by a test approved by the Centers for Disease Control and Prevention,

(II) whose spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) is diagnosed with such virus or disease by such a test, or

(III) who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary's delegate).

I suspect - but do not know - that cuts to salary and/or hourly wage rates will be as acceptable as "work hours reduced" so until Sec. Treas. or the IRS clarifies this, the choice is yours....

[Retireatee1]

Yeah that sounds a bit risky.  I guess I should wait until December to see if there is clarification provided.

[Pizzabrewer]

I'm looking into this also.  From what I've read so far (admittedly nothing from a final authority) the "rules" for what is allowable as a COVID-related situation are pretty loose.  The biggest issue seems to be if the employer and/or retirement plan administrator will allow this type of distribution.